Evictions soar in San Francisco as real estate prices rise

SAN FRANCISCO Robert Earl Davis moved to San Francisco after serving in the Vietnam War, hoping to find a home where he could settle in as a musician and artist.

Forty years later he is facing a new chapter in this city with Gold Rush roots – another tech boom that is fueling what tenant advocates call an “epidemic of evictions.” His landlord notified him earlier this year that he was going out of the rental business.

“It’s mind-numbing,” said Davis, who has lived since 1973 in the same rent-controlled, two-bedroom apartment in a quiet neighborhood. “I went around the city and all I heard is we’ve got housing but it’s all full. There’s a seven- or eight-year waiting list for seniors. Basically, it’s a death sentence.”

Real estate prices have skyrocketed here more than almost anywhere else in the country. The average home is selling for $897,338, 22 percent more than three years ago, making it more lucrative for many owners to sell than rent.

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Evictions in general have gone up about 38 percent in the past three years. But the number of evictions under the Ellis Act, a state law allowing landlords to empty buildings and exit the rental business, has jumped to 162 this year, an increase of more than 145 percent from the previous one, according to a recent report by the city’s budget and legislative analyst.

An untold number of tenants have been threatened with eviction, but chose to accept compensation and move before official papers were filed. Once they leave, they have trouble finding anything affordable.

“It used to be this was a place you’d come if you were an artist,” Davis said. “You look out now, and it’s a different place.”

He is referring to the influx of tech workers that seems to have everyone here talking. Hundreds of companies have either sprung up or relocated to the city.

Cranes and cement trucks share the streets with private buses that shuttle tech workers to their jobs.

Finding an apartment to rent resembles a sports competition. Open houses draw long lines and offers of cash payments.

Even though the city has some of the strongest rent control laws in the state, covering units built since 1979 and offering extra protection to seniors and disabled people, the median rent is now at $3,156.

The reinvigorated economy means more business revenue for the city, but also a renewed debate about development. In signs of a backlash, voters turned down two November ballot measures that would have allowed construction of high-rise condos on the waterfront with selling prices up to $5 million.

“It is an indication that people are scared,” said Patrick Carlisle, chief market analyst for Paragon Real Estate Group. “People think this needs to be slowed down a little.”

Carlisle doesn’t think the city is caught in another dot-com bubble. The last real estate frenzy fizzled in 2001 when a crop of overvalued tech companies went bust.

This time, Carlisle and others say, tech companies at the forefront of the boom are solid. The number of evictions attributed to the Ellis Act is also much lower than in 2000, when it hit 384.

“The main issue is that San Francisco has not built any replacement rental housing to match the job growth that’s gone on the last few years,” said Janan New, executive director of the San Francisco Apartment Association. “When you don’t build or supply more, there is going to be a squeeze on existing housing stock. That drives rents up, and people have to find a way to buy.”

It also creates a climate that attracts speculators, who purchase undervalued buildings and use the Ellis Act to evict tenants, she said. They make quick renovations and resell the buildings for top prices. The homes end up so expensive that new buyers turn to tenancy-in-common, teaming up to purchase buildings with multiple units.

The Ellis Act, when used properly, New said, allows landlords to retire and cash out their properties. They are required to pay displaced tenants up to $5,201 each, plus an additional $3,473 to those who are elderly or disabled. They then can’t rent the property again for five years.

“I have nothing against landlords,” said Jeremy Mykaels, who lives in the Castro neighborhood and recently fought off an Ellis Act eviction. “But speculators? They don’t care who they turn out.”

Mykaels, 63, a former web designer who is disabled, has lived in his apartment for 19 years. He’d have to pay three times more for a comparable unit. His only option, if the papers are re-filed, he said, is to leave the city.

Local officials are looking into legislation to restrict use of the Ellis Act, perhaps by asking the state to let them create a moratorium. Tenant advocacy groups are pressing for tighter control of tenancy-in-common agreements, increased supervision of Ellis Act plans and greater scrutiny of property once it is emptied under the Ellis Act.

Advocates concede that there are few legal defenses against the law, beyond ensuring all procedures are followed. The courts won’t reverse an eviction just because a speculator instigated it.

“In Superior Court that fact doesn’t in and of itself give you a defense,” said Matt McFarland, a lawyer at the Tenderloin Housing Clinic. “But in the court of public opinion, people understand that there is a difference between someone who owns a building for 30 years and is a senior and doesn’t want to be landlord and an Ellis Act (eviction) where it’s motivated by profit and greed.”

Davis has avoided eviction by finding technical faults in the Ellis Act papers. He’s not sure what will happen next time. “They need to do something extra in San Francisco to make sure this isn’t such a slam dunk for the Realtors,” he said.